Korean steel manufacturers are struggling in both the domestic and overseas markets. Cheap Chinese products are increasing their share in the Korean market while various trade regulations are strangling them abroad.
According to the Korea iron and Steel Association, a total of 11,051,210 tons of steel products were imported from China to Korea between January and September this year to show a year-on-year growth of 31.4 percent. The sum increased by 20.7 percent from the previous year to US$8.88756 billion.
The 10.7 percentage point difference is because Chinese exporters supplied their products at lower prices than in 2013. The average unit cost of the products was US$804 per ton for the first nine months of this year, US$72 lower than during the same period of 2013.
At present, the steel product inventory in China is increasing rapidly due to low demand. This means more and more companies are looking to deal with the situation by increasing their exports. This, in turn, is chipping away at Korean steelmakers’ domestic sales. For example, Korean steelmakers’ sales of hot-rolled steel sheets in their home turf declined by 27.7 percent between January and August 2014. Their section steel and steel pipe sales fell by 3.8 percent and 2.8 percent as well, respectively.
Korean companies are trying to export more of their products in an effort to cope with Chinese competition. However, they are blocked by regulations in major export destinations. A total of 59 trade disputes are going on in 16 countries regarding Korean steel exporters. 13 of the cases in eight countries started this year.
The United States’ trade protectionism in the steel industry has become stronger and stronger to the point of causing intense disputes. Recently, Husteel, Hysco, Nexteel and SeAH Steel filed a petition with the United States Court of International Trade, claiming that the Department of Commerce’s imposition of anti-dumping tariffs of 9.89 percent to 15.75 percent on their oil-country tubular goods (OCTG) in July this year was unfair. They had been acquitted in the preliminary judgment but the ruling had been overturned through local steelmakers’ lobbying.
More recently, the U.S. has called oil pipelines exported from Korea into question, too. Besides, Canada has raised anti-dumping and countervailing duty lawsuits against Korean OCTG. Last month, the EU filed a similar suit against Korean companies’ electrical steel sheets.